Friday, May 6, 2011

The Goldwater Institute has repeatedly met and talked with Glendale officials, including Mayor Elaine Scruggs, to try to resolve the constitutional conundrum raised by the city’s effort to subsidize the sale of the Phoenix Coyotes. But the Goldwater Institute will not turn a blind eye to Glendale’s plan to spend hundreds of millions of taxpayer dollars to prop up the Coyotes in violation of the state constitution.The deal hinges on two main components. First is that the city proposes borrowing up to $100 million to purchase arena parking rights from the future team owner. This is a charade meant to hide a $100 million handout to the new owner because the city already owns the parking rights. The second component is the $97 million arena management fee. That fee would directly subsidize the Coyotes by reimbursing its future owner for operating expenses that only benefit the team. However laudable the goal of keeping the Coyotes in Glendale, it does not merit back-room negotiations, abuse of taxpayer money, and violation of the law.
It is not too late for Glendale to keep the Coyotes in town legally. The city should pursue more private investment in the deal by having the NHL reduce its upfront sales price for the team and spread any balance out over the 30 year arena lease term. It should also demand that the NHL promise not to relocate the Coyotes over the term of the lease. The city should reduce the management fee so that it does not reimburse the future owner of the Coyotes for operating expenses that only benefit the team. And if the future owner of the Coyotes really believes he can turn the bankrupt team around, Glendale should demand a 100% asset-backed guarantee of all revenues that have been promised to the city.
There are legal ways to keep the Coyotes in town and protect taxpayers; Glendale should choose one.Nick Dranias holds the Clarence J. and Katherine P. Duncan Chair for Constitutional Government and is director of the Joseph and Dorothy Donnelly Moller Center for Constitutional Government at the Goldwater Institute.
Learn More:
Goldwater Institute: Frequently Asked Questions about Glendale/Phoenix Coyotes deal
Maricopa County Recorder’s Office: Glendale Parking Agreement (Jan. 25, 2011)Forbes:A Critical Battle Over The Sports Economic ModelWashington Post:George Will: An Arizona city’s sports mania encounters a hard check